– By Rahul Jain
The Union Budget for 2023–24 has been presented and largely meets expectations. Given that this was the final full budget before next year’s general elections, the challenge for Nirmala Sitharaman was to strike a balance between populism and prudence. To her credit, the FM has performed admirably on this front. From the creation of jobs and investment in infrastructure to the simplification of tax laws, this budget has something for everyone. It has outlined seven main priorities, known as “Saptrishi,” that aim for inclusive growth, youth empowerment, and environmentally friendly economic development, thereby creating a brighter and more prosperous future for all Indians. This is India’s attempt to take the lead in dealing with the global climate crisis.
The government’s primary focus is on job creation through infrastructure development through capital expenditure. The FM has increased capital expenditure to Rs 10 trillion, up 33% from the previous year’s budget of Rs 7.50 trillion. The government recognises the need to do the heavy lifting given that private capital expenditures will be low due to the global economic slowdown.
The Railway’s capital expenditure budget is also the highest, at Rs 2.40 trillion. It is nine times greater than in 2013. However, that is not all. The PM Awas Yojana budget has also been increased by 66% to Rs 79,000 crore.
However, this will not be a simple task. The government’s borrowings for the following year are estimated to be a staggering Rs 15.4 trillion, compared to Rs 14.2 trillion for the current fiscal year. What is remarkable is that the government has adhered to the fiscal deficit target of 6.4% for the current fiscal year and remains committed to fiscal consolidation, projecting a fiscal deficit for FY24 of 5.9% of GDP, which is roughly what most economists anticipated.
In the area of personal income tax, the budget has announced a few changes to the structure of personal income tax under the new regime:
1) There are now only five tax brackets, down from seven.
2) The exemption threshold has been increased from Rs 2.5 lakh to Rs 3 lakh.
3) Individuals earning up to Rs 7 lakh will be exempt from taxation.
According to the calculations, individuals earning up to Rs 15 lakh can save up to Rs 45,000 in tax under the proposed changes.
The elderly also have reasons to rejoice. The maximum deposit limit for the Senior Citizen Savings Scheme is proposed to be increased from Rs 15 lakh to Rs 30 lakh. In addition, the maximum deposit limit for the Post-office Monthly Income Account Scheme will increase from Rs. 4.5 lakh to Rs 9 lakh for a single account and from Rs 9 lakh to Rs 15 lakh for a joint account.
There is good news for those who pay the highest tax rate of 42.74%. The new tax system reduces the highest surcharge rate from 37% to 25%, effectively lowering the tax rate to 39%. These revisions will increase the disposable income of individual taxpayers, which can boost investment and spending. Overall, it is a growth-oriented budget that will serve as a roadmap for achieving India’s ambitious ‘Amritkal’ goals.
(Rahul Jain, President and Head, Nuvama Wealth. The views expressed in the article are of the author and do not reflect the official position or policy of FinancialExpress.com.)